Tata Motors, Fiat Chrysler to Boost Ties, Share Technology

According to several people in the know of the plans, Fiat and Tata have been discussing sharing of a 2-litre diesel engine, which will be used in the Jeep Compass or a C segment Jeep, internally codenamed 556, as well as in a Tata Motors premium SUV codenamed Q5, which is under development.Ketan Thakkar | ETAuto | November 17, 2016, 22:04 IST

Los Angeles: Fiat Chrysler Automobile is exploring the possibility of strengthening the partnership with Tata Motors in India beyond joint manufacturing to sharing of engines and transmission, even as the Italian-American automaker readies a final blueprint to build volumes through the Jeep SUVs in the country through local manufacturing.

The company, which is expected to go the whole hog on local manufacturing of the Jeep SUV Compass for the Indian market at Ranjangaon near Pune, wants to sweat the assets further and see how the introduction of more vehicles and sharing of engines and transmissions from the same factory could help reduce cost and price the products attractively.

According to several people in the know of the plans, Fiat and Tata have been discussing sharing of a 2-litre diesel engine, which will be used in the Jeep Compass or a C segment Jeep, internally codenamed 556, as well as in a Tata Motors premium SUV codenamed Q5, which is under development.

Speaking to Indian journalist on the sidelines of the LA Auto Show, Mike Manley, the global head of Jeep, said both companies regularly talks to each other on various opportunities, but declined to provide the specifics.

“From my point of view, I will be very open to discuss with Tata about opportunities, where collectively we could win and market could win. We can discuss on engines, transmission and some components of vehicle platforms for sure, those elements that will help build volumes and bring down price,” said Manley, who is also the chief operating officer for Asia Pacific at Fiat Chrysler.

An agreement on these lines is likely to be finalised shortly, people in the know of the plans said.

The Jeep brand has had a phenomenal run over the past five to seven years, where the volumes have more than tripled to over 1.23 million units. The home market, the US, still accounts for over 70% of its total sales and it is banking on emerging markets like India and Brazil to drive further growth for the Jeep brand.

The Ranjangaon plant will be the fourth manufacturing base for the Jeep Compass, which is scheduled to be launched in the second half of 2017. Fiat Chrysler, which has invested about $278 million in the plant, will be using India as a key export base to major right-hand-drive markets. The company has estimated annual volumes of 50,000 for the Jeep Compass, including exports to vendors.

The Compass SUV is expected to be followed by a smaller B Jeep. The project, codenamed 526, is at a conceptual stage still, and Manley is non-committal on that.

The B Jeep could put the company head-on with local giants like Maruti, Hyundai, Ford, Mahindra and Tata Motors, as the pricing may breach Sub Rs10 lakh.

If the concept gets approved, based on internal expectations at the company, the Compass SUV and the smaller B Jeep are likely to add 1 lakh units a year to the global sales in the coming three to four years.

According to Manley, the Compass SUV is going to help Fiat Chrysler to take annual sales beyond 2 million units from the current 1.23 million.

In India, the segment the company is targeting with the Compass — SUVs priced from Rs 14 lakh to Rs 24 lakh — is not yet developed and that can work to Jeep’s advantage, Manley said.

“The vehicles in India are going to be a real shot in the arm for the company. I think India can be big just on one vehicle. But I also think that there can be an opportunity for us to bring a smaller jeep into the market as well,” he said. “I am looking at a smaller jeep below the Renegade and it may be under four meter, but it is still at project phase.”

(The reporter is attending the LA Auto Show at the invitation of Fiat Chrysler)

In fact, segment leaders like Maruti Suzuki, Tata Motors and Hero MotoCorp have reported de-growth of 34.3 per cent, 45 per cent and 20 per cent, respectively giving a clear indication of a prolonged slowdown in the sector.